I need to improve my credit score and have four closed, potentially negative accounts

Karen asks: My credit score is 572. I’m desperate to improve it, but I don’t know what step to take first. I have four companies listed on my credit report as potentially negative accounts; they’re also listed as closed. The total amount owed between these four debts is $1,900. I’m confused as to what I should do at this point. Will it improve my score to make payments on these accounts? Would it be better or worse for my credit score to take settlements?

Although the fact that those four accounts are already listed as potentially negative means some damage has already been done to your credit, the best thing to do is always to repay as much as you can of your debts, no matter how old they are.

You may want to try contacting these creditors directly and seeing if they will take a partial payment to settle the debt. This will appear on your credit report as a settlement, but that’s better than having a closed account which you still owe money. Or, try to negotiate a payment plan with them that will repay the total amount over time. Sometimes creditors will stop charging interest altogether if you can promise to make monthly payments on time. If they did this and you could afford just $80 a month, you could get rid of these debts in about two years.

Accounts stay on your credit report for about seven years from the last time information is reported about them. And typically, your credit score starts to recover from negative accounts after about two years have passed. So the sooner you pay them or settle them, the sooner the clock starts ticking on the two years and seven years. As long as they stay unpaid, they’ll probably remain on your account.

Good Luck,

David @MoneyUnder30